Taiwan’s Directorate-General of Budget, Accounting and Statistics estimated third-quarter economic growth at 14.36%, 2.94 percentage points above its August forecast, while growth for the first three quarters reached 14.22%. National Development Council Minister Yeh Chun-hsien said fourth-quarter growth may slow to 6% to 7% because of a higher base last year, but full-year growth of 12% is still "not a problem."
Third-quarter growth reached a multi-decade high
The statistics agency released its preliminary third-quarter figure on Oct. 30, putting growth at 14.36%. That was 2.94 percentage points above the forecast issued in August. Growth for the first three quarters came in at 14.22%, with the third quarter marking the strongest reading for the same period in 48 years and the first three quarters posting the highest level in half a century.
According to Central News Agency, Yeh said after attending an event on the 1st that fourth-quarter growth could fall to 6% to 7% because the comparison base from last year was relatively high. Even so, he said full-year economic growth of 12% remains on track. Whether the figure can exceed 13%, he added, will depend on whether export growth improves in the fourth quarter.
Yeh says market concerns are focused on AI software
Recent losses in U.S. technology stocks tied to AI profit concerns have raised questions about whether Taiwan’s semiconductor exports could be affected. Yeh said the market’s main concern is AI software, while Taiwan is more exposed to hardware. He said orders remain solid through the end of this year and into the end of next year, and described the current move as part of a market adjustment. In his view, any impact on Taiwan would be temporary.
Intel (INTC) recently fell nearly 30% on Oct. 30 after weak earnings guidance and other factors. Anthropic has also reportedly faced questions over whether it could secure an investment-grade credit rating immediately after going public. Responding to those developments, Yeh said: "What the U.S. capital market is mainly worried about is AI software. Taiwan is focused on hardware. There are basically no problems with orders from the end of this year to the end of next year. This is just part of the market’s adjustment process, and even if there is an impact on Taiwan, it would be short-lived."
Taiwan companies have no cash-flow problem, he says
Yeh also said Taiwanese companies have earned substantial foreign exchange and that their funding and cash flow are "completely fine," which should prevent disruption to the hardware side of the business. As for U.S. companies, he said some emerging cloud service providers do face cash-flow pressure, and that Intel and Anthropic are also under strain. Still, he said they can raise funds through channels such as corporate bond issuance, making the issue a temporary one, with pressure concentrated more in software.
He said: "Taiwanese companies have earned a lot of foreign exchange. Their capital and cash flow are completely fine, and that should not affect our hardware segment."
AI payback depends on the pace of physical AI adoption
On when AI investment can generate returns, Yeh said the market’s real concern is whether large cloud service providers, or CSPs, can turn heavy capital spending on AI and cloud computing into practical deployment and measurable returns. He said that will take time to verify and will also depend on how quickly physical AI develops.
As an example, he said factories run by Taiwan Semiconductor Manufacturing Co. (TSMC, 2330) are gradually becoming more automated, and the required computing power has already been planned. He added that physical AI is mainly used in robotics and autonomous driving, both of which require large amounts of computing power. The faster those areas advance, the faster cloud providers can recover their investment.
Yeh said the upward direction of AI development is clear, but market volatility may still appear during the process as investors question whether computing power can be translated into real-world deployment and whether application companies can actually make money.
